Education Level Has a Drastic Effect on Earning Potential

Despite the groans of protest that the beginning of a school year can bring to young students everywhere, those considering higher education beyond high school should take into account their earning potential with each subsequent year of higher education they achieve.

In fact, education appears to be the penultimate investment decision that the average person will make, and from numbers put forth by the U.S. Census Bureau, it is clear that choosing not to go to college can cost one a lot of money in the long run.

When the last census was completed in the U.S., 90 percent of young adults graduate from high school, with 60 percent of those going on to college for at least some period of time. Clearly, with the majority of high school graduates choosing to continue to college, the concept of earning potential has become a part of the national consciousness.

Adults over the age of 25, 84 percent had a high school diploma, whereas 26 percent had a bachelor's degree or higher level degree. In 1975, only 63 percent of adults over the age of 25 had a high school diploma, with just 14 percent having obtained a college degree or higher.

While one can naturally intuit that higher levels of education lead to better earning potential, it is the statistics put forth by the Census Bureau that truly make the point. For purposes of the study, the Census Bureau operated under a strict guideline and took into account earnings by adults between the ages of 25 and 64.

This includes what is generally thought of as the prime working years, and the Bureau used earnings numbers from the years 1997 through 1999 to complete the report.

The report findings indicate that the average earnings of all adults in the proscribed age range and during the noted years was $34,700 per year. Earnings ranged widely accordingly to education level, and in a predictable manner. High school dropouts earned on an average $18,900 per year, with high school graduates earning $25,900 per year.

Those who attended college but did not achieve a degree earned $31,200 per year, whereas those earning an Associate's degree earned an average of $33,000 per year. College graduates earned $45,400 per year. The trend at these levels of education is obvious, but the differences are even more extreme as advanced degrees are pursued.

The same study found that the average salary for those earning a Master's degree from among the analyzed group was $54,500, while those earning a professional degree, including an M.D., J.D., D.D.S. or D.V.M. was $99,300. Those earning a Doctoral degree, which is the academic equivalent of the professional degrees noted, earned an average of $81,400.

In addition to the fairly intuitive prospect that advanced levels of education are accompanied by advancing earning potential, is the less easily discernible fact that estimates of so-called 'work-life' earnings actually compound during one's lifetime.

What this means is that, while those will lower levels of education will general see a fairly gradual increase in their income during the course of their work-lives, those attaining Bachelor's degrees or higher level of education will tend to see a steeper increase in earnings during the course of their lives.

On balance then, the message to those deciding on whether to continue their education is fairly clear. If increased earning potential is the goal, higher levels of education appear to directly influence the outcome, with the various professional degrees most geared toward earning potential.